Capital Structure of a Joint Stock Company - Treasury Shares
Treasury shares (cổ phiếu quỹ) are shares that a joint stock company (JSC) has issued to and thereafter bought back from its shareholders. The legal treatment of treasury shares under Vietnamese corporate law is not clear. In particular, it is not clear if treasury shares form part of the charter capital or not. On the one hand, treasury shares can be considered as part of the charter capital because:
- Although treasury shares are bought back by a JSC, they could still be considered as having been issued and qualify as issued shares (cổ phần phát hành).
- Under Circular 19/2003, a JSC is only required to reduce its charter capital and cancel its treasury shares three years after such treasury shares are bought back. This provision suggests that until the treasury shares are cancelled, they form part of the charter capital.
- Similarly, there is no clear requirement under the business registration regulations to require a JSC to register to reduce its charter capital when it buys back its own shares.
- In practice, when a public listed JSC buys back its own shares, the Vietnam Depository Centre (VSD) still records the public listed JSC as “owner” of such treasury shares. In addition, a public listed JSC may sell its treasury shares on the stock exchange as a secondary trading or may use its treasury shares as in-kind capital contribution in other companies.
However, on the other hand (of which I am in favour), treasury shares should not be considered as part of the charter capital of a JSC because:
- The Enterprise Law provides that treasury shares are “withdrawn shares” (cổ phần thu về) and form part of the number of shares authorised for sale. It is difficult to consider “withdrawn shares” are “issued shares”.
- Circular 19/2003 is an implementing circular of the old Enterprise Law. Therefore, its provisions may not be consistent with the Enterprise Law.
- Treasury shares are not entitled to dividend or voting rights as other outstanding shares in the charter capital. In practice, while the VSD considers a public listed JSC as owner of its treasury shares, these shares are not allocated with rights to vote, to receive dividend or bonus shares. If treasury shares form part of the charter capital, why they are not given dividend and voting rights in the same manner as other outstanding shares in the charter capital?
On 16 June 2025, the National Assembly of Vietnam officially passed the Employment Law 2025, replacing the Employment Law 2013. The new law will take effect on 1 January 2026. Among its most significant revisions are changes to unemployment insurance (UI) regulations, aimed at expanding coverage, increasing benefits, and clarifying the responsibilities of both employers and employees. This article summarizes the most notable updates to Vietnam’s unemployment insurance system and other key changes under the new Employment Law 2025.
1. Major Changes to the Unemployment Insurance System
· Broader Scope of Participants: The Employment Law 2025 broadens the scope of mandatory UI participation to include (1) employees with labor contracts of at least one month and (2) part-time employees under similar contracts whose monthly salary exceeds the minimum wage.
· Additional Exclusions: The Employment Law 2025 now excludes the following groups from UI participation: (1) employees who meet the conditions for receiving retirement pensions (not just those already receiving them, as under the 2013 Law), (2) employees receiving other social insurance benefits or monthly government allowances, and (3) employees on probationary contracts. The new law also broadens the situations where UI contributions are not required. Now, employees who do not receive a salary for 14 working days or more in a month will not be subject to UI contributions. (Previously, under Decree 28/2015, this only applied to those on maternity or sick leave for that duration).
· Contribution Rates and Salary Basis: The UI contribution rate is set at a maximum of 1% of the employee’s monthly salary, giving the government flexibility to adjust the rate below this ceiling if needed. The salary basis for UI contributions now includes the monthly salary plus any allowances or other regular additional payments. This is a change from the Employment Law 2013, which based UI contributions only on the salary used for social insurance.
On 14 June 2025, the National Assembly passed the amended Corporate Income Tax Law 2025 (CIT Law 2025). Among other things, this legislation is expected to bring significant changes in determining the method of calculating tax for capital transfer and securities transfer transactions (Capital Gains Tax) undertaken by foreign companies. This post aims to provide a comprehensive and clear overview by analyzing and comparing these new regulations with those stipulated in the Corporate Income Tax Law 2008 (CIT Law 2008).
1) Definition of Taxable Income Arising in Vietnam for Foreign Companies
A key area of adjustment in the CIT Law 2025 relates to the definition of taxable income arising in Vietnam for foreign companies, making it more transparent.
Under the CIT Law 2008, the specific definition of such income was not explicitly clarified within the law itself; rather, it was detailed in Decree 218/2013 guiding the CIT Law 2008. In contrast, the CIT Law 2025 has directly incorporated this definition, clearly stating that taxable income arising in Vietnam for foreign companies is income originating from Vietnam, irrespective of the location where business activities are conducted.
On 27 June 2025, as a foundational step for establishing an international financial hub in Vietnam, the National Assembly of Vietnam adopts the Resolution 222 on the International Financial Center (IFC) in Vietnam (specifically in Ho Chi Minh City and Da Nang City) (Resolution 222). However, when compared to international best practices, the Resolution reveals several weaknesses that may deter international investors.
Based on a comparative analysis, here are the main drawbacks:
Isolation from Vietnam domestic markets – Perhaps the most important benefits of investing in an IFC in Vietnam is the opportunity to access Vietnam domestic capital and financial market. Unfortunately, Resolution 222 does not clearly contemplate how an IFC member can invest or interact with Vietnam domestic capital and financial market. Without a better access to Vietnamese domestic markets, investors from regional financial centers may have less incentives to move to the IFC in Vietnam.
Unstable and unpredictable legal framework: Resolution 222 took effect from 1 September 2025. After five years, the legal framework contemplated by Resolution 222 will be reviewed by the National Assembly and may be replaced by a Law on International Financial Center. Existing projects can continue to operate under “existing” legal frameworks at such time. Given the amount of implementing legislation and the infrastructure required, it may take one to two years for the IFC to be up and running. Accordingly, investors may only have around three to four years to actually run theirs businesses before a potential new law will be issued. During the operation of the IFC, a regulation can be issued to limit the rights of IFC members to ensure “national interests” and “prevent threats against national security”. This provision is very broad and vague and could allow IFC regulators to change their regulations at any time.
The Vietnamese Government has recently issued Decree 168/2025 on enterprise registration, which replaces the previous Decree 1/2021. This blog post highlights several significant changes and clarifications to enterprise registration procedures under Decree 168/2025.
1) Additional forms of documents evidencing the completion of capital contribution and transfer
Decree 168/2025 introduces new options for documenting the completion of capital contributions or capital transfers in the enterprise registration application dossiers as follows:
For evidence of the completion of a transfer, one of the following documents is now accepted:
• A copy or extract of the member register or shareholder register.
• A copy or original of the liquidation minutes of the transfer contract.
• Bank confirmation of completed payment.
• Other documents validly proving the completion of share or capital contribution transfer as prescribed by law.
Decree 153/2020 (as amended), which governs private corporate bond offerings, creates ambiguity concerning the permissible use of bond proceeds, especially when parent companies aim to finance their subsidiaries.
Decree 153/2020 stipulates that bond proceeds can be used for implementing investment programmes and projects, restructuring debts of the issuing enterprise itself, or for other purposes sanctioned by specialised laws. The ambiguity stems specifically from how the qualifier “of the issuing enterprise itself” applies to these permissible uses. This leads to two primary interpretations:
The recently enacted law amending the Investment Law 2020 (Amendment Law 2025), effective 1 July 2025, introduces the following key changes:
1. Major Decentralization of Approval Authority
1.1. Under the Amendment Law 2025, the Provincial People's Committees, rather than the Prime Minister under the previous law, have the authority to grant investment policy approval for the following projects:
A pdf version of this post can be downloaded here.
In June 2025, the National Assembly passed a new Law on Management of State Capital (Law on State Capital 2025) replacing the same law issued in 2014 and amended in 2018 (Law on State Capital 2014). The Law on State Capital 2025 have given the individuals managing State-owned (or controlled) enterprises (i.e., the Members’ Council or the Chairman) substantial flexibility to run their businesses. In this post, we discussed some key changes introduced by the Law on State Capital 2025. A comparison between the Law on State Capital 2025 and Law on State Capital 2014 by Deep Research of Gemini 2.5 Pro can be found here.
Clearer scope of application
Law on State Capital 2025 clearly provides that enterprises which more than 50% charter capital or voting shares of which is held by the State are also subject to this law. This point is not clear under the Law on State Capital 2014.
Definition of State Capital
Under Law on State Capital 2025, State capital in a State-owned enterprise only includes the contributed capital portion held by the State out of the total owner's equity of the enterprise. In addition, the Law on State Capital 2025 defines State capital by reference to the holding percentage of the State. This new approach is a significant change from the Law on State Capital 2014 because:
The Law on State Capital 2025 excludes other funding sources such as the state budget, public assets, and development investment funds from the definition of "State capital" within an enterprise. Instead, the Law on State Capital 2025 classifies these as sources of capital and assets to be used for investing state capital in enterprises; and
in many scenarios, the holding percentage is more important than the absolute amount
The 9th working session of the National Assembly of Vietnam, which lasted 35 days and ends on 27 June 2025, is probably the most productive working session of the National Assembly for several decades. In this one working session, the National Assembly has passed a number of laws equal to all laws passed by the National Assembly in 17 previous working sessions.
Immediately after the conclusion of the National Assembly’s working sessions in late June 2025, newspapers and social media in Vietnam were flooded with information about these new laws and regulations. Information about these new laws was important since many of those laws would take effect on 1 July 2025 – only one week after the National Assembly concluded its working session.
As part of our marketing efforts, we also set out to review those laws and resolutions for our legal updates. However, when we first started, our lawyers struggled to locate the final text of many of these laws. For us, a “final text” of a law would be a scanned PDF of these laws bearing the seal of the National Assembly and signatures of the Chairman of the National Assembly or an official publication on official websites such as the Official Gazette or the National Database of Legal Documents.
Introduction
From 1 July 2025, Vietnam’s local Government system formally operates according to a new “two-tier” system in 34 provinces as opposed to the old “three-tier” system in 63 provinces. In the new system, there are only two levels of local Government including provinces (tỉnh) and wards (xã, phường). Government agencies at district level no longer exist. Vietnam also combines several existing wards to form a larger ward. As a result, we estimate that Vietnam now has about 3,300 local people’s committees down from 10,000 local people’s committees.
To achieve this, by 1 July 2025, the National Assembly and the Government have, among other things, amended the Constitution, amended the Law on Organisation of Local Government, issued 34 resolutions and 28 Decrees to restructure the local government system. Unfortunately, despite such herculean efforts, it appears that the new regulations have not addressed adequately various legal issues arising from the restructuring. In this post we will discuss some of these issues. More information can be found from the attached research generated by the latest AI LLM from Google (Gemini Pro 2.5).
No clear geographical boundaries between various local authorities at wards levels.
It appears that on 1 July 2025, the Government did not establish clear geographical boundaries between the newly established wards. This is because the Standing Committee of the National Assembly sets a deadline of 30 September 2025 for the Government to do so for each province. Until a source of truth of the geographical boundaries at wards level is set up, many companies and individuals may not know for sure the correct addresses that they may use in their operations including application submitted to the authorities, invoices issued to clients, or contracts.
In 2024, the National Assembly of Vietnam enacted the new Law on Organization of the People’s Court (Law on Courts), which implemented significant reforms to the structure of the People’s Court system in comparison to the 2014 Law on Courts. Shortly after the promulgation of the 2024 Law on Courts, Vietnam initiated a substantial reorganisation of its administrative divisions, transitioning from a three-tier (province, district, commune) model to a two-tier (province, commune) model. Consequently, in 2025, the National Assembly approved an amendment to the 2024 Law on Courts to align the court system with the updated two-tier administrative division model (2024-2025 Law on Courts). Below are our discussions on the key changes under the 2024-2025 Law on Courts when compared to the 2014 Law on Courts.
1) Complete Restructuring of the Court Hierarchy
The court system is majorly reformed with the removal of the High People's Courts (Tòa án nhân dân cấp cao) and replacement of District Courts with Regional Court (Tòa án nhân dân khu vực).
In this post, we continue to discuss certain aspects of the new provisions on beneficial owners (BOs or commonly called as “UBOs”) under the new amendments to the Enterprise Law 2020 passed in June 2025 (2025 Enterprise Law Amendment) and the new Decree 168/2025 on enterprise registration. We have discussed some of the issues in our earlier post.
UBOs with joint controls
Under the 2025 Enterprise Law Amendment and Decree 168/2025, the criteria to determine whether an individual is an UBO seem to apply to a single individual only. As such, it is not clear if the information about related persons of such individual (e.g., his/her relatives) should be taken into account when determining an UBO. For example, it is not clear if an individual together with his/her spouse hold more than 25% voting rights of an enterprise should be declared as an UBO. A literal reading of Decree 168/2025 suggests that declaration of UBOs is not required in case of joint control. However, such an approach is likely not consistent with the purpose of the provisions on UBOs.
The law amending the Enterprise Law 2020 (Amended Enterprise Law 2020), effective 1 July 2025, introduces the following key changes:
1. The New Beneficial Owner Regime
1.1. The Amended Enterprise Law 2020's most significant change is the introduction of a Beneficial Owner (BO) regime, designed to enhance transparency and align Vietnam with international anti-money laundering standards.
Who are BOs?
1.2. The Amended Enterprise Law 2020 defines a BO as the individual who ultimately owns or controls an enterprise. The recently issued Decree 168/2025 on enterprise registration (Decree 168/2025) further clarifies the specific criteria for identifying a BO. In particular, an individual is considered a BO if they meet one of the following conditions:
In Vietnam, industrial parks are usually developed by private investors (IP Developer), rather than the State. The IP Developer will directly lease a large land parcel from the State, build necessary infrastructure, and then sublease land with ready-built infrastructure to the ultimate tenants (IP Tenant) for their investment projects.
From a legal standpoint, the nature of these land sublease agreements (sublease contract) between the IP Developer and the IP Tenant is an interesting issue. Should the sublease contract be treated as a property sale or a traditional lease? The answer has significant implications for the rights and obligations of both parties.
As discussed in our previous post, we believe the pilot mechanism introduced under Resolution 171 will bring a significant improvement to the legal framework for commercial housing development in Vietnam. With the enactment of implementing Decree 75/2025, this pilot mechanism is now fully set up. In this post, we will highlight key takeaways from Decree 75/2025 and discuss potential implications for housing developers.
On 29 April 2025, the State Bank of Vietnam (SBV) has issued Circular 3 on the opening and using of VND account for conducting indirect investment in Vietnam (Circular 3/2025). From 16 June 2025, Circular 3/2025 will replace Circular 5 dated 12 March 2014 of the SBV (Circular 5/2014) guiding the opening and using of indirect investment capital account (IICA) for conducting indirect investment in Vietnam.
n a landmark reform for 2025, the Government of Vietnam has commenced a significant restructuring of its ministries. This major overhaul, approved by Resolution No 176 of the National Assembly dated 18 February 2025, aims to create a leaner, more efficient, and effective state apparatus to better support the nation's development.
The restructuring involves a series of complex mergers and transfers of functions between ministries. Based on the guiding decrees, the key changes include:
The Vietnamese government recently issued Decree 69/2025 (effective 19 May 2025), which amends Decree 01/2014 regarding foreign investor’s share purchase in Vietnamese credit institutions. Here are the main changes:
1. Scope of application
Decree 69/2025 clarifies that foreign-invested economic organisations (FIEOs) which are required to comply with investment conditions and procedures applicable to foreign investors must now follow the same rules (in Decree 01/2014 as amended by Decree 69/2025) applicable to foreign investors when buying shares in Vietnamese credit institutions.
Under the Investment Law 2020, these FIEOs refer to entities where foreign investors hold a majority of the charter capital (FIEO-F1). Notably, Decree 69/2025 does not explicitly state whether it applies to economic organisations majority-owned by an FIEO-F1, even though such economic organisations are also treated as foreign investors under the Investment Law 2020.
In criminal proceedings in Vietnam, civil claims (e.g., claims for compensation, repair of damaged property) often arise alongside criminal charges against criminals. The Criminal Procedure Code 2015 introduces the position of “civil claimants” (nguyên đơn dân sự) and “civil defendants” (bị đơn dân sự) to facilitate the handling of civil claims in Vietnamese criminal proceedings. However, other than creating these positions, the Criminal Procedure Code 2015 lacks detailed provisions on how these civil matters should be addressed in criminal proceedings. This legal gap, coupled with inconsistent judicial practices, makes the resolution of civil claims within criminal cases particularly complex and problematic. This post will explore the key challenges in resolving civil claims during criminal proceedings.
No clear procedures - Article 30 of the Criminal Procedure Code 2015 provides that civil matters in criminal cases are to be resolved during the adjudication of the criminal case. However, the Criminal Procedure Code 2015 provides no further instructions on the procedure for resolving civil claims within criminal proceedings. It remains unclear what procedural rules apply—whether the criminal court should follow its own process or adopt the procedures set out in the Civil Procedure Code 2015 to settle a civil claim during criminal proceedings. This uncertainty can lead to inconsistent judicial practices and procedural confusion.
Scope of civil claims - Article 64.1 of the Criminal Procedure Code 2015 defines a civil defendant as “an individual, agency, or organization that, as prescribed by law, is responsible for compensating for damages”. It appears from the definition of civil defendant that a civil claim during criminal proceedings only relates to the issue of compensation for damages. It is not clear whether other issues such as ownership of assets or return of illegal property could be covered in a civil claim during criminal proceedings. In addition, the court may also designate the person making or subjecting to a claim on civil issues which are not claim for damages to another position (e.g., person with related rights and obligations) during the proceedings.
Decree 125 of the Government dated 5 October 2024 (Decree 125/2024) introduces updated regulations for the education sector, including a requirement that a license must be obtained for establishing "other centres performing continuing education tasks" (trung tâm khác thực hiện nhiệm vụ giáo dục thường xuyên in Vietnamese and in the rest of this article, Other Continuing Education Centres). Crucially, the education law fails to clearly define these centres, creating significant ambiguity for education service providers, particularly those centres teaching K-12 subjects (e.g., math, literature).
First, the Education Law 2019 and Decree 125/2024 lack an explicit definition of Other Continuing Education Centres. Interpreting relevant provisions of the Education Law 2019, it appears that Other Continuing Education Centres are centres providing:
Following the issuance of the Law on Electricity 2024, Vietnam's Government has swiftly replaced its initial framework for Direct Power Purchase Agreements (DPPAs) under Decree 80/2024 by issuing Decree 57/2025 on 3 March 2025. Coming into effect immediately, Decree 57/2025 repeals Decree 80/2024, which had only been active since 3 July 2024. Decree 57/2025 largely maintains the two DPPA models introduced by Decree 80/2024 (1) via private line (Private DPPA) and (2) via the national grid (Grid-Connected DPPA), but introduces important changes impacting eligibility, pricing, and contractual details. Key changes include:
Flexible customer eligibility - Decree 57/2025 links customer eligibility (for initial participation and ongoing qualification) to a minimum consumption threshold (Minimum Take Amount) defined in the Wholesale Electricity Market Operation Regulations issued by the Ministry of Industry and Trade (MOIT). Decree 80/2024 instead used a fixed threshold (average ≥200,000 kWh/month). Accordingly, eligibility for participating in either DPPA model now depends on potentially dynamic wholesale market rules rather than a static figure, requiring ongoing monitoring of MOIT's regulations.
Stricter customer eligibility – A Large Customer in a DPPA arrangement which has been implemented for 12 months must ensure that in a calendar year, it has purchased from EVN the Minimum Take Amount for the 12 month periods ending on 31 October of the previous calendar year. Under Decree 80/2024, there is no requirement that the Minimum Take Amount must be purchased from EVN. It is not clear if this requirement will apply to a Private DPPA under which the customer purchases directly from the RE Generator.